Quality Gap Narrows Between Domestic and Foreign Car Brands

J.D. Power Study Examines Design and Production Quality

SHANGHAI (AdAgeChina.com) -- Chinese consumers used to think car marketers based in Japan, the U.S. and Europe made much better vehicles than local automakers, but those days are disappearing. Local players are closing the gap when it comes to making, selling and servicing new cars.

The quality gap between new Chinese vehicles and international brands has reached the narrowest margin yet, according to the J.D. Power Asia Pacific 2010 China Initial Quality StudySM (IQS).

The study, now in its 11th year, examines problems experienced by new vehicle owners within the first two to six months of ownership. The new study covers 151 vehicle models from 55 different makes and is based on evaluations from 14,649 owners of new vehicles purchased between October 2009 and June 2010. The research was conducted from April to August 2010 in 33 major cities in China.

Vehicle problems are examined in two categories--quality of design and quality of production, which includes defects and malfunctions. The overall quality score is determined by the number of problems experienced per 100 vehicles (PP100). The fewer the problems, the higher the quality.

The gap in initial quality between Chinese domestic and international brands has fallen from 116 PP100 in 2009 to 89 PP100 in 2010. Initial quality for domestic brands has improved by 34 PP100 from 2009 to an average of 224 in 2010. For international brands overall, initial quality has improved by seven PP100 from 2009 to 135 in 2010.

"As the automotive market in China matures, competition based on initial quality is becoming increasingly intense," said Mei Songlin, J.D. Power's general manager of research services, Asia/Pacific in Shanghai. "In order to achieve differentiation based on quality, manufacturers must undertake a customer-focused approach that examines and addresses problems as reported by vehicle owners, and includes "soft" issues associated with components or features that are difficult to understand [and] use, in addition to malfunctions."

Overall new-vehicle initial quality, which has increased steadily during the past 11 years, improved by 6% in 2010, to average 168 PP100 in 2010. In addition, the initial quality gap between the highest-performing and the lowest-performing brands narrowed significantly in 2010, decreasing from 282 PP100 in 2009 to 199 PP100 in 2010--the smallest gap since the study began.

Among owners who don't have problems with their vehicle, 32% said they will recommend the brand to others, while 16% said they will rbuy the brand again. Recommendation and repurchase rates decline to 13% and 7%, respectively, among owners who experience ten or more problems with their vehicle.